Crypto exchange Binance is going through troubling days with BUSD, which it promotes in hopes of becoming the largest stablecoin.
In 2019, Binance carried out a study that will have active use on the stock market and will make users more adopt the stock market. Having agreed with Paxos, the company launched a stablecoin called Binance USD (BUSD). This stablecoin, issued by Paxos and backed by Binance, has caught the SEC’s hawkish stance on cryptocurrencies. As for BUSD, the SEC argues that it is an unregistered security.
End to End: Binance and BUSD
Binance, which has experienced a rapid rise in the crypto money industry, has worked on a stablecoin that its stock market will support in 2019. The issuer of the stablecoin, which was launched under the name Binance USD (BUSD), was a crypto company called Paxos.
Paxos ran the BUSD issuance for Binance for 4 years. In terms of supply, he was held responsible for the incineration and the introduction of new supply into circulation. Binance has also undertaken the collateral of this stablecoin. But in recent days, the distrust created by the UST and FTX events has been reaping the fruits of. The SEC has shown that it is starting to establish more dominance in the crypto industry and will not discriminate.
Following the Paxos investigations conducted by the US New York regulator, a move came by the SEC as well. The SEC argued that the Binance and Paxos relationship was illegal and the stablecoin product was an unregistered security.
Another of the allegations came about the USDC issuer Circle company. According to the news of Bloomberg, Circle started all these processes. The USDC issuer filed a complaint about BUSD with the New York Department of Financial Services (NYDFS) last year. Circle’s complaint was that Binance was not managing reserves properly and the background was not solid on BUSD.
The rivalry on USDC and BUSD has become a cascade of legal processes that has put crypto investors in a mood of fear.
SEC and Paxos: Main Issue BUSD
Recently, there has been a news flow that created a bombshell effect in the crypto industry. In the news reflected in the press, it was stated that a new legal process was started by the US Securities and Exchange Commission (SEC). This process targets Paxos, which issues the BUSD stablecoin for Binance.
The SEC claimed that Paxos was acting illegally on BUSD. Also, the SEC took an approach that BUSD is a security. The emergence of this news found a place on the agenda.
It has been claimed that Paxos, which has entered the SEC’s radar, has withdrawn on BUSD and stated that it will help in the continuity of the cryptocurrency until 2024. According to these allegations, Paxos will stop issuing BUSD for Binance.
The news in the press that the issuer will terminate its services reflected the depeg outlook on the BUSD side. Users started converting their BUSD to USDT to avoid a possible new UST scenario.
The situation has reached such a level that a new supply of 1 billion dollars was put into circulation on the USDT side. As a result of this shift of interest to other stablecoins, BUSD experienced a drop to the level of $ 0.9950.
Next Processes and Binance Claims
Binance CEO Changpeng Zhao (CZ) was not discouraged by the fact that the agenda was such a mess. CZ kept his calm on social media and gave the message that they are strong against the attacks.
#BUSD. A thread. 1/8
In summary, BUSD is issued and redeemed by Paxos. And funds are #SAFU!
— CZ 🔶 BNB (@cz_binance) February 13, 2023
The forward plans of Binance, which is preparing to lose its BUSD fortress, has been a matter of curiosity. Among the allegations made, it was on the agenda that Binance would adopt USTC. The spread of this claim highlighted a bullish scenario of more than 20 percent on the USTC side.
On the other hand, another claim was that Binance will issue its own stablecoin and execute it accordingly. In this context, there has been talk that Binance will issue a cryptocurrency called USD Binance (USDB).
These news and claims, which occupy the agenda, have also caused decreases in the crypto money market. Many altcoins experienced strong drops of 15-20 percent.
Just in the week when the USA will announce inflation data, an atmosphere of fear emerged in the markets due to the bad news that emerged.
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